Bank of America Corp. provided a letter of credit for Harvard University, a step required by the Trump administration for it to participate in the federal student aid program after its officials alleged the nation's richest school is in a position of financial instability.
In September, the Education Department's Office of Federal Student Aid — which oversees grants and loans to students at universities — placed Harvard on "Heightened Cash Monitoring." That gives the government additional oversight over an institution's cash management. Many of the schools on the
Federal officials asked the Ivy League school, whose endowment is $57 billion, for a guarantee of $36 million to "ensure that Harvard meets its financial obligations to both students and the Department." They
Harvard disclosed the agreement with Bank of America, which expires in September 2026, in a filing to bond investors.
"The letter of credit requested by the US Department of Education is unnecessary and unwarranted," a Harvard spokesperson said in an emailed statement. "While Harvard rejects the government's claims regarding the University's financial solvency, it has obtained a letter of credit to put this issue to rest."
A spokesperson for Bank of America declined to comment, while a representative for the Department of Education did not reply to requests for comment.
The agreement, printed on Bank of America letterhead, was described as an irrevocable standby letter of credit. Generally, as part of such agreements, banks take on a client's obligation in case of default.
David Bergeron, a former acting assistant secretary at the Department of Education during the Obama administration, said that a letter of credit is "normal procedure" for institutions with financial challenges to participate in the student aid program.
"It's unusual that it's Harvard, or any institution with substantial endowments," he said.
Not all colleges placed on Heightened Cash Monitoring are able to secure a letter of credit, given their financial stresses, said Dominique Baker, a professor of higher education and public policy at the University of Delaware.
"This is theater," she said. "There is no financial reason for Harvard to be on this list. It's about pushing them toward capitulation."
Harvard has been
The administration initially accused Harvard of failing to tackle antisemitism on campus following Hamas' October 2023 attack on Israel, and the fight broadened to issues over diversity on campuses, the use of race in admissions and hiring and the role of government in supporting billions of dollars in federal research.
Harvard won a legal victory in September when a judge said the government violated the university's free speech rights by cutting off more than $2 billion in research funding. The administration has said it would appeal that ruling.
